As 2024 comes to a close, many consumers are still opting to rent over purchasing, allowing seasoned investors to continue cashing in on a lucrative residential rental market. With so much success, real estate investment newcomers are beginning to take notice and eye long-term investment opportunities.
However, owning a rental property does not necessarily guarantee success. To be profitable in rental real estate, investors must learn how to buy and rent property in a strategic way. This includes mastering your target markets and figuring out when to buy rental properties.
When to Buy an Investment Property
Housing market trends are influenced by various economic pressures, including:
- Interest rates
- Access to credit and government initiatives that support homeownership
- Changes to local economic and job markets
By tracking these factors, investors can identify profitable investment buying opportunities throughout the year. However, whoever says it’s impossible to time the real estate market has not tapped into the secrets of real estate cycles.
Whether you are interested in short- or long-term investing, there is a seasonally better time to purchase investment properties–winter. Let’s look at some of the non-economic factors to look for that help influence a traditionally bullish winter for real estate rental investment buyers:
Time on Market
For beginners, investing in a rental property can be easier when you know what to look for. Nothing creates a better buying opportunity than a seller who is pressured to offload their property.
Historically, houses stay on the market longer during the late fall into winter months–October through February. Buyers hold off on their purchasing decisions due to holiday plans and travel. After all, moving can be burdensome. The idea of packing and unpacking during a frigid winter season can deter even the most motivated buyers. For sellers opting to keep their property on the market throughout winter, the anxieties and costs of extended holding times often force them to reduce their asking prices.
Price Reductions
Price reductions are a key indicator of a buyer’s market or opportunity. Homes with reduced pricing during lean months advertised as “Special Holiday Discounts” or “Winter Sales Price” indicate when to buy a rental property. Hidden behind these catchy marketing phrases is often a highly motivated seller looking to make a deal.
Investors looking out for these properties can walk into negotiations with the upper hand and more bargaining power than during otherwise better-selling seasons.
Less Competition
Experienced or well-informed sellers take their properties off the market during winter months to avoid the stagnation and costs of a lower buying season. For this reason, as well as aforementioned holiday plans and travel, many investors put house hunting on hold. Traditional homebuyers are less motivated and wary of homes that have remained on the market into the winter months.
Short- or long-term investing in a competitive housing market can be difficult, especially for beginners investing in rental properties for the first time. Although the winter drawl creates a smaller inventory, it also generates less competition for investors.
End-of-Year Tax Benefits
As the calendar year winds down, sellers may be encouraged to offload their property to take advantage of any tax benefits for the current tax year. Additionally, investors may be entitled to certain tax advantages if capital expenditures are in before the end of the year.
Holiday Cheer
Believe it or not, experts suggest making an offer on a property on or around Christmas day can give buyers a slight upper hand during negotiations. With a sense of goodwill and a giving atmosphere, it is believed that sellers are more willing to reduce prices or cater to a buyer’s needs.
When to Buy a Rental Property: Winter Is First but the Runner-Up Is Spring
According to market trends, the second best time to purchase an investment property is at the start of spring. As the weather improves, the rental market begins to pick up. But why invest in property during the spring rather than taking advantage of the winter’s slowdown in demand, competition, and pricing?
While some investors prefer the fair weather season because it makes it easier to analyze properties and pinpoint any problematic issues with the home, the main reason is inventory. Experienced investors who know how to buy and rent properties successfully, regardless of competition, indulge in the expanded market.
However, while buying opportunities will increase, so will the competition. Investors must have strong, reliable, and flexible capital resources to catch the eye and ear of sellers fielding multiple offers on their property.
Conclusion
With inflation and interest rates shifting, you may be wondering “Is it worth buying a house to rent out?” The answer is simple–yes! However, to succeed, it’s critical to understand your markets to determine when to buy a rental property.
For beginners investing in rental property, winter provides ample benefits and chances for success. Cold weather, holiday festivities, and the end of the fiscal year create several non-economic factors that investors, new or experienced, can take advantage of, including:
- Less competition
- More motivated sellers
- Price reductions
- Tax benefits
- Holiday and seasonal goodwill
While the springtime brings warmer weather and more opportunities, it also creates a more saturated buyers market–giving sellers the upper hand during negotiations.
When it comes to timing out the market correctly, savvy, well-informed investors take advantage of the real estate cycles and understand when to buy investment property. So, this winter, don’t be afraid to lace up your snow boots, throw some hot cocoa in the thermos, and hunt down that ideal rental property!
Reliable & Flexible Long-Term Financing
Access to adequate capital can be just as important as knowing when to buy a rental investment property. Partnering with a reliable and flexible capital partner like CIVIC gives investors of all experience levels an edge over the competition.
Our Single Rental loan and Rental Portfolio loan options provide:
- Competitive 30-year term loan options
- Maximum rental flexibility
- SFR, warrantable condos, townhomes, PUD, and 2-4 units eligibility
- DSCR blanket loan with no W2s, paystubs, or tax returns required
CIVIC delivers simple, honest, and reliable lending solutions for real estate investors. With a team of proven experts and flexible terms, rates, and prepayment options, we help investors learn how to buy and rent properties successfully with tailored and agile capital packages.
Want to partner with the market’s most reliable and flexible long-term capital provider? Fill out this form to schedule a free consultation today!
